Builders push ready homes for cash boost
Builders caught in the cash crunch are offering discounts and customised payment plans to ignite sales of ready-to-move homes. Selling ready homes will be critical for developers with unsold inventory this year, as the real-estate industry plods through a multi-year slowdown.
In a bid to revive buyer sentiment and boost sales, National Real Estate Development Council (Naredco) last week launched a web portal (Housingforall.com) displaying ready-tomove properties with occupation certificates.
“Builders want to encash unsold, ready inventory as early as possible, given that almost everyone is facing a cash crunch now. Financial institutions are not giving money and NBFCS (non-banking financial companies) are rarely sanctioning loans as well. The portal addresses this and makes it easier for customers to buy a ready home without any risk,” said Rajan Bandekar, president, Naredco, Maharashtra.
Prices of residential apartments have remained stagnant for long, even declining in many cities. Prices of ready homes, typically higher than under-construction homes, have not risen either, though they come with fewer risks.
Gurugram-based M3M Group, which builds premium projects and is currently developing a Trump Tower in National Capital Region (NCR), clocked Rs 524 crore of sales in December alone, of which Rs 320 crore came from its two ready luxury projects.
Pankaj Bansal, director, M3M Group, attributed the good response to its dedicated campaign to reduce ready inventory and customized payment plans. “Developers have the option of slashing prices by 10-15% but customers are still not buying. We offered 10% down payment and no EMI for a year, which converted to sales,” he said.
Rajeev Talwar, CEO, DLF Ltd, said selling ready homes will revive customer confidence.
“Developers today depend on home sales to generate cash flows, where they get the down payment while buyers get a concession. DLF anticipated a seller’s market coming in soon, and the current need and demand to sell ready homes in the sector reinforces that. It would benefit developers if they moved towards selling only ready homes,” he said.
Unlike most developers, DLF now follows a build-and-sell model, based on the strategy that it will not sell until it is completed. It is now selling ready homes in its core Delhi-ncr and Punjab markets.
With buyers showing interest in ready homes, inventory levels declined 12% during the December quarter from a year ago, said a Proptiger report in January. From 883,000 unsold housing units at the end of the same period last year, unsold stock fell to 775,000 in Q3 FY20.
Mumbai and Pune together contribute 57% of this unsold stock. Half of the units in this stock are affordable homes, priced below Rs 45 lakh. Mumbai-based Wadhwa Group has four projects in central and western suburbs costing Rs 2-4 crore, which are ready or nearing possession. The developer says it gives customers breathing space of six months to a year before they have to start paying EMIS.
“For ready homes, buyers pay a lot more importance to the locality and project and the amenities and lifestyle it offers rather than the developer. However, for under-construction units, the credibility of the developer is important,” said Bhaskar Jain, head of sales and marketing, Wadhwa Group.